Google may have been cutesy with its math-referenced bids at the recently finished auction for the Nortel patents, but it didn’t win the auction. And, now, it appears that the winning bidder may get a visit from antitrust regulators.
The Nortel patent portfolio–all 6,000 patents in the bunch–was awarded to Rockstar Bidco, a recently formed group that turned out to be a consortium of Google rivals consisting of Microsoft, Apple, RIM, EMC, Sony, and Ericsson–all of whom pitched in millions of dollars to outbid Google on the Nortel patent portfolio. The winning bid amounted to US$4.5 billion–five times the stalking-horse bid of US$900 million that Google initially made for it.
Nortel’s intellectual property covered several important wireless communications (including LTE) and Internet technologies that touch “nearly every aspect of telecommunications and additional markets as well, including Internet search and social networking.”
In the hands of Google, the patent bundle could have been a shield against patent suits from rivals and patent trolls. But, more than just the defense argument, Google saw “a formidable patent portfolio” (such as Nortel’s was) as a wall of safety that “helps maintain [Google’s] freedom to develop new products and services.” But, in the hands of its rivals, it could be a very sharp weapon that could sever a huge part of Google/Android’s lifeline.
Several antitrust experts were wary about the result of the bidding. Antitrust lawyer Robert Skitol, for instance, wondered why the portfolio is worth “worth five times more to this group collectively than it is to Google.” He asked further, “Why are three horizontal competitors being allowed to collaborate and cooperate and join hands together in this, rather than competing against each other?”
The American Antitrust Institute (AAI) quickly requested the Department of Justice (DOJ) to inquire into the possibility of collusion versus Google/Android in the Nortel patents’ sale. Observing that the group teamed up rather than competed against one another, the AAI suggested that improper practices may have seeped into the transaction and urged the DOJ to conduct an in-depth investigation. AAI’s letter to the DOJ read:
How could shared ownership of the Nortel portfolio be worth so much more to the Rockstar group than sole ownership of it would be worth to Google? This in itself raises questions about the concerted intentions and objectives of the six consortium members that could not be achieved through independent bidding and eventual individual ownership or licensing of some or all parts of the patent portfolio at stake. The deal is described as the ‘largest intellectual property auction of all time’ involving a portfolio ‘unprecedented in its scale
and scope of coverage compared to anything that has come to market before.’
The federal agencies who approved the bidders have been called in by antitrust enforcers at the Department of Justice in order to review the sale and find out whether it might hurt or block Android and unfairly limit competition.
Google’s initial bid for the Nortel collection of patents was US$900 million. It turns out that the package is worth more to Google competitors than Google initially quantified it to be worth, and Google stopped bidding when the price reached US$4 billion. Do you think Google didn’t find the Nortel patents worth spending that much on? Or do you think Google has a Plan B?
Image credit: Robert Scoble (Flickr)